Asked by Taylor Ingram on Jul 26, 2024
Verified
A change in the relative prices for two goods can be shown as a parallel shift in a consumer's budget line.
Parallel Shift
occurs when a graph's curve moves left or right without changing its shape, often used in reference to demand or supply curves.
Relative Prices
The price of one good or service compared to another, reflecting its scarcity or value in exchange.
- Comprehend the role of budget limitations in choices made by consumers.
- Learn how variations in pricing and income levels affect the decision processes of consumers and the achievement of their highest utility.
Verified Answer
ZK
Zybrea KnightAug 01, 2024
Final Answer :
False
Explanation :
A change in the relative prices for two goods results in a pivot or rotation of the consumer's budget line, not a parallel shift. A parallel shift would indicate a change in the consumer's income or purchasing power, not a change in relative prices.
Learning Objectives
- Comprehend the role of budget limitations in choices made by consumers.
- Learn how variations in pricing and income levels affect the decision processes of consumers and the achievement of their highest utility.